by Lance Turner
Posted 3/12/2013 11:40 am
Updated 9 months ago
Arkansas legislators by Monday had filed at least 10 bills dealing with state incentives for the $1.1 billion Big River Steel manufacturing plant proposed for a site near Osceola (Mississippi County).
Most of the bills were shell bills, empty documents designed to be amended later. Monday was the final day legislators could submit bills for the current legislative session without a two-thirds vote in each chamber to allow an exception.
The Monday deadline came the same day that one of two cost/benefit analyses on the Big River project was due to the Legislature
On Feb. 26, the Bureau of Legislative Research entered into two contracts with a pair of consultants to study the economic effects of the plant. The report by Regional Economic Models Inc. of Amherst, Mass., which cost $29,000, was due Monday.
A second report by IHS Global Insight Inc. of Englewood, Colo., which cost $48,750, is due Tuesday.
The shell bills were filed by Rep. Monte Hodges, D-Blytheville, and Sen. David Burnett, D-Osceola, co-chairs of the Legislative Steel Caucus, formed after the project was announced Jan. 29. The bills were referred to the agriculture, forestry and economic development committees of the House and Senate.
On Tuesday, Arkansas Economic Development Commission spokesman Joe Holmes told Arkansas Business that not all of the shell bills will be used, but AEDC wanted to be prepared whether legislators decided run the entire project in one bill or several.
“Obviously, not all of these will come into play, but since this is the first time Amendment 82 has been used, we wanted to make certain we were covered,” Holmes said.
Gov. Mike Beebe, AEDC and steel executive John Correnti announced the project on Jan. 29. Correnti said the $1.1 billion steel plant will employ 525 people at an average salary of $75,000 per year. Initially, the plant will produce steel for the oil and gas industry, but Correnti plans a second phase that will make a high-grade steel for use in the automotive and electrical industries.
Calling the project “one of the biggest” Arkansas has ever seen, Beebe and AEDC plan to provide $125 million in incentives, including loans and grants, under Amendment 82 to help cover the plant’s start-up costs.
Projects funded under Amendment 82 require legislative approval. Part of that process allows the Legislature to conduct its own economic study of the incentives, the project and its effects.
Per Amendment 82, the Legislature has had 20 days to vet the project, after AEDC submitted a letter of commitment between AEDC and Big River Steel on Feb. 21. The Legislature hired Regional Economic Models and IHS Global Insight to conduct a cost/benefit analysis, examining Big River’s economic, fiscal and demographic effects on employment; taxes and revenue; gross domestic product; population; wages; income; and bond issues.
Additionally, Global Insight examined the steel market, the project’s economic incentives and the project’s long-term profitability.
The governor, AEDC and the Arkansas Teacher Retirement System, which is investing $60 million in the plant, presented parts of their own study during question and answer sessions with the House and Senate last month.
During those meetings, AEDC officials expressed confidence that Correnti and his team could build the plant and have it producing steel at the necessary capacity to repay what it will owe the state.
John Shelnutt, the state’s economic forecast, said during a meeting with the Senate that he’s projected the state’s investment in the plant will break even in four to six years.
Once the Legislature has completed its analysis, a bill or bills for the incentives will enter the legislative process.
Last week, the Mississippi County Planning and Development Commission approved $14.5 million in funding for the project, paid for by the county’s economic development tax. The deal still requires approval from the county’s finance committee and full quorum court, which could vote on the deal on March 26.
Big River Bills
Here are some of the bills dealing with the Big River Steel project: